Monster Beverage's Investment Potential: Why MNST Could Surprise You
Monster Beverage Corporation MNST stock has lost 13.8% in the year-to-date period, underperforming its industry peers and the S&P 500 index. MNST’s stock movement reflects a decline from the industry and the Consumer Staples sector’s growth of 12.4% and 10.4%, respectively. The company also underperformed the S&P 500's 15% rise in the same period.
MNST Price Performance
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At the current price of $49.65, the stock trades at a 23.3% discount to its 52-week high of $61.23 and close to its 52-week low mark of $43.32. MNST is trading below its 200-day moving average, signaling potential bearish sentiment in maintaining recent performance levels.
However, the company’s share price crossed its 50-day moving average on Sept. 9 and has continued to trade above this mark since then.
Monster Beverage Trades Below 200-Day Moving Average
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The Zacks Rank #3 (Hold) company’s stock suffered a pullback due to reduced foot traffic in convenience stores and a retail shift toward mass and dollar channels. Additionally, a tighter consumer spending environment and weaker demand have negatively impacted beverage and consumer packaged goods companies.
These challenges were evident in the company’s second-quarter 2024 performance, with management noting slower growth rates in the energy drink category in the United States and several other countries.
According to Nielsen reports for the 13 weeks ending July 20, 2024, sales in the energy drink category, including energy shots, across the company’s combined outlets (convenience, grocery, drug and mass merchandisers) increased 0.6% year over year. The company’s energy drinks portfolio includes Monster Energy, Reign, Bang and Full Throttle. Sales of the company’s energy drinks brands, excluding Bang, declined 2.5% in the second quarter.
In the second quarter of 2024, Monster Energy sales fell 3% year over year, Reign sales dipped 0.5% and Full Throttle sales decreased 6.9%, while Red Bull sales rose 1.7%.
MNST’s Estimates Trend Down
The Zacks Consensus Estimate for Monster Beverage’s 2024 and 2025 EPS declined 1.2% and 1.05%, respectively, in the last 30 days. The downward revision in earnings estimates indicates that analysts are slowly losing confidence in the stock.
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For 2024, the Zacks Consensus Estimate for MNST’s sales and earnings implies year-over-year growth of 5.5% and 7.1%, respectively. The consensus mark for 2025 sales and earnings indicates 8.2% and 13.8% year-over-year growth, respectively.
Here’s Why MNST Could Surprise You
Despite challenges like soft retail traffic and its impact on energy drink sales in certain markets, the global energy drinks category has shown resilience and growth. Consumers continue to view energy drinks as an affordable luxury, driving opportunities for increased penetration and per capita consumption. The company's expansion into non-Nielsen measured channels further supports its growth prospects.
Notably, net sales to customers outside the United States grew 4.3% year over year, accounting for about 39% of the total net sales, and rose 13.7% on a currency-adjusted basis.
Monster Beverage is also exploring international price increases and plans a 5% price hike on core brands and packages in the United States starting Nov. 1, 2024. The company has maintained market share leadership in the U.S. energy drink category across all outlets for the 13 weeks ending July 2, 2024.
Innovation has been a key growth driver for the company, with positive feedback from bottlers, distributors, wholesalers, retailers and consumers worldwide. Its robust pipeline for non-alcoholic and alcoholic beverages is set to keep the momentum going.
Exciting launches include Monster Energy Ultra Vice Guava in the United States in October 2024 and an expanded rollout of Predator Energy Gold Strike in China in late 2024 and 2025, following its launch in April 2024. The Beast Unleashed is available in all 50 states, and the company’s new hard tea line, Nasty Beast, is available in 49 states. A second variety pack of The Beast Unleashed in slim 12-oz cans, featuring Mean Green, Pink Poison, Gnarly Grape, and Killer Sunrise, is set to debut soon.
Key Picks From MNST’s Sector
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely The Chef's Warehouse CHEF, Coca-Cola KO and Flowers Foods FLO.
The Chef's Warehouse offers specialty food products in the United States. CHEF presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CHEF’s current financial year’s sales and EPS indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported figures.
Coca-Cola, the global beverage giant, currently has a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 4.7%, on average.
The Zacks Consensus Estimate for KO’s current financial-year sales and earnings suggests growth of 0.6% and 6%, respectively, from the year-ago reported figures.
Flowers Foods emphasizes providing high-quality baked items, developing strong brands, making innovations to improve capabilities and undertaking prudent acquisitions. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for FLO’s current financial-year sales and earnings indicates growth of 1% and 4.2%, respectively, from the year-earlier actuals. FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
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CocaCola Company (The) (KO) : Free Stock Analysis Report
Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report